South Coast: Industrial market robust but lack of stock is concern
The South Coast industrial market has weathered the Brexit uncertainty storm robustly but remains hampered by the long-term issue of a lack of good quality supply. Strong demand from occupiers is removing almost all prime stock from the market and pushing up rents, according to Lambert Smith Hampton.
Take-up in the South Coast region was 439,490 sq ft in Q4 2016, an increase of nearly 17% from the 375,929 sq ft seen in the previous quarter and an increase of more than 11% compared with Q4 in 2015.
Despite a notable pause caused by political uncertainty in Q2 and Q3, 2016 as a whole saw 1,888,705 sq ft transacted in the region, just 11% below the 2,115,000 sq ft in the previous year.
The main restriction to a higher take-up is the lack of supply that continues to be seen across the board in the region. The lack of freehold stock available was highlighted by the sale of 20,039 sq ft at Unit B Moorside Road, Winnall, Winchester, to AEL Properties for £85 per sq ft.
LSH also saw further evidence of good quality secondary space rental growth with the letting of 11,515 sq ft by CBRE Global Investors to Belron UK at Unit 4 Flanders Industrial Park, Hedge End, Southampton, at £8 per sq ft - a record headline rent on this estate.
The most notable transactions during the quarter include a pre-let of 47,500 sq ft by Mountpark and USAA Realco to Paul Murray plc, which has prompted a revised planning application to enable the speculative development of a further 60,000 sq ft and 100,000 sq ft on this scheme, Colt International’s letting of 53,500 sq ft at Kenwood Business Park, Havant and Armorgard letting of 65,000 sq ft at Fareham Industrial Park.
The number of industrial enquiries seen in Q4 remained strong at 112, which was consistent with the previous quarter. This provides confidence that the credentials remain resilient and robust in the South Coast industrial market, says LSH.
"Our expectation is that the speculative development taking place will unlock requirements on the M27 corridor and 2017 will see a healthy level of take-up," it adds.
